PORTLAND — A partner in a project to create market-rate housing and a new 15-room hotel on Congress Street said the work will give new life to an old site.

Denovo LLC plans to convert the former Hay & Peabody funeral home at 749 Congress St. to a hotel with a restaurant, and build seven townhouses behind the hotel. 

“The historic building seems tailor-made for this use. … It lends itself well to this type of design,” Nate Delois said Tuesday. Delois, his father, brothers, and Jeff Harder are partners in the project. 

The Planning Board held a final hearing and was expected to approve a Level III Subdivision and Site Plan for the project Tuesday.  

Seven new townhouses, to be sold as three-bedroom condominiums, will be built behind the new hotel in an existing parking area. 

Plans were first reviewed during a workshop in April. Neighborhood response has been muted, and adjoining Mellen Street property owners are willing to provide easements to link utilities to the new condominiums. Also, owners of Tandem Bakery, across Congress Street, will allow their parking lot to be used by dinner patrons at the new restaurant, since  Tandem closes at 6 p.m. 

“We’ve been working closely with the neighbors and the boards,” Delois said. “The response so far has been positive I think because of the reuse of a historic building.”

The Delois family has experience in the hospitality industry and converting historic buildings, and plans to call the hotel The Francis, in honor of architect Francis Fassett, who helped redesign the city after the Great Fire of 1866.

According to a Planning Department memo, the redevelopment is expected to cost $3.8 million.

Denovo has an agreement with building owners Martin and Rochelle Dassa of Falmouth. City tax records date the building to 1900, but Delois said it is at least 20 years older than that. The building has not been used since the funeral home closed in 2005.

“One thing about the hotel use is, we can make the building somewhat open to the public,” Delois said.

Plans call for almost 31,000 square feet of development, including the parking area. The seven condominium units will be four stories high. A carriage house at the rear of the site that contains two housing units will remain.

The site is within the Deering Street and Congress Street historic districts. The city Historic Preservation Board reviewed development plans at its July 6 meeting before forwarding the proposal to the Planning Board.

Planning and preservation board comments have largely focused on the condominium design. Those comments led to changes in the condo plans that included adding brick sidewalks in front, eliminating east-facing balconies and removing brick exteriors in favor of clapboards on the second and third floors, according to a memo from architect David Lloyd.

David Harry can be reached at 781-3661 ext. 110 or [email protected]. Follow him on Twitter: @DavidHarry8.

A conceptual sketch of redevelopment at 749 Congress St. in Portland shows the proposed hotel and new condominium units behind.

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